Question

Which of the following statements is true of a corporation?

a. Shareholders are authorized to sign contracts or make business commitments on behalf of the corporation.
b. Shares of stock cannot be readily bought and sold by investors on the open market.
c. The liabilities of the corporation can be paid by the personal assets of the shareholders.
d. Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from the sale of stock.

Answer 1

Answer:D

Step-by-step explanation:

Answer 2

d. Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from the sale of stock.

Step-by-step explanation:

At the end of each accounting period, the corporation is expected to pay a tax known as income tax from the taxable income earned by the corporation. This tax is paid by the corporation before the amount to be paid to the shareholders of the company in form of dividends.

The shareholders of the company are further subjected as individuals to personal income tax.

This is known as double taxation of dividend. Gains from sale of stock are also taxed under personal income tax.